Costs News

05 February 2020
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Party that inadvertently failed to file costs budget granted relief from sanctions

A party that failed to file and serve its costs budget in time because it was not included in a list of pre-case and costs management conference (CCMC) steps agreed between the parties, has been granted relief from sanctions.

Manchester Shipping Ltd v Balfour Shipping Ltd and Anor [2020] EWHC 164 (Comm) is a case where the defendants have admitted liability for procuring a breach of contract and (in the case of the second defendant) a breach of fiduciary duty. The only outstanding issue is what, if any, loss was caused.

As per the CPR, the parties' costs budgets should have been filed and exchanged by not later than 21 days before the date fixed for the first CMC. On 16 December 2019, the parties' solicitors agreed a timetable of 19 pre-CMC procedural steps to the CMC with tight deadlines for compliance. The timetable did not require any steps to be complied with between 21 December 2019 and 6 January 2020, and did not mention filing and exchanging budgets.

The claimant filed and served its Precedent H budget on 24 December 2019, but the defendants did not do so until 8 January 2020 – 13 days late. Their solicitors, Byrne & Partners, said that, in light of the agreed timetable, they had not appreciated that the claimant intended that costs management should take place at the CMC.

Lionel Persey QC, sitting as a deputy High Court judge, had to decide whether to grant relief against the Denton criteria under rule 3.14, which provides for a court fees-only budget in such circumstances "unless the court otherwise orders".

The defendants argued that, although the delay was not trivial, it was of “limited significance” because the budget was submitted over a week before the CCMC and the claimant had had sufficient time to consider it and to file a Precedent R.

Mr Persey said the failure was serious but accepted this argument: “The paperwork was all in order by the time the bundles were filed for the CCMC and the claimant was able to deal without difficulty with the defendants' budget at the hearing. More importantly, I was able to hear full argument and rule upon both parties' costs budgets at the hearing.”

On the reason for the default, the judge accepted that it inadvertent given that the defendants were relying on the agreed table of procedural steps. “The default was understandable in that context, although the defendants should not have allowed themselves to be distracted in this way. The parties had not agreed that costs budgets would not be dealt with at the CCMC. I do not, however, regard defendants' default as egregious in the particular circumstances of this case.”

Standing back and looking at all of the circumstances, Mr Persey said it was appropriate to grant relief from sanctions. “The breach, although serious in terms of lateness, did not prevent the litigation from being conducted efficiently or at proportionate cost. No inconvenience was caused to the court or to other court users.

“Against this background, and on the particular facts of this case, it would not in my view be proportionate to deprive the defendants of the potential to recover their own costs should they ultimately be successful at trial.”

Stephen Cogley QC and Simon Goldstone (instructed by Wikborg Rein) for the claimant; James Willan (instructed by Byrne & Co) for the defendants.

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